Silver Wheaton’s (SLW) Q316 results were characterised by exceptionally strong production from its gold assets, supported by record quarterly output at Salobo and Minto and a strong performance at 777. Production from SLW’s silver assets was in line with our expectations. However, a 20.0% under-sale of silver relative to production (towards the upper end of the historical range) and a 22.1% under-sale of gold resulted in a return of inventory to more normal levels. This detracted from financial results, although PBT was still at its highest since Q113 (when silver and gold prices were US$29.89/oz and US$1,645/oz, respectively). Given broadly flat production expectations, however, plus the end-of-year ‘flush through’ effect, no repetition of this inventory build is expected in Q416.
